Cordish Head Defends Leominster Slots + Casino Gaming

Monday, September 23, 2013

Steven Jones-D'Agostino, GoLocalWorcester Contriibutor

Joe Weinberg, president of the Gaming & Resorts Division for Baltimore-based The Cordish Companies.

Joe Weinberg likes to talk about the benefits that Leominster will enjoy from his company’s proposed $125-million slots parlor there. But the longtime president of the Gaming & Resorts Division for Baltimore-based The Cordish Companies bristles when questioned about the socioeconomic impact of such a facility on the Greater Leominster community.

Weinberg is in the North County city, to rally a big enough turnout of “yes” votes tomorrow for the final Bay State referendum election for the sole slots-parlor license in Mass. Cordish, considered one of the premier slots-parlor operators in the U.S., has proposed Live Casino! Massachusetts.

On July 18, Leominster Mayor Dean Mazzarella signed a host-site agreement with Cordish, parent of PPE Casino Resorts MA. On September 24, Leominster voters will decide the fate of the Cordish proposal. A simple majority will prevail.

The Bay State’s two-year-old Expanded Gaming Act authorizes the state Gaming Commission to license three regional casinos and one slots parlor. The licensing fee for each casino will be a minimum of $85 million and requires a capital investment, to include a hotel facility, of at least $500 million. The Commonwealth will receive 25 percent of gross gaming revenues. The slots facility, which can hold up to 1,250 slot machines, has a $25-million license fee, and a minimum capital investment of $125 million. The slots facility will be taxed at 40 percent of its gross gaming revenue.

Two other slots developers, in Plainville and Raynham, are still vying to secure the state’s sole slots license. Six other proposals remain alive for a total of three regional casinos, which, unlike slots parlors, contain other games such as blackjack and roulette. Two are for Eastern Mass. (Boston and Everett), one, for Central Mass. (Milford) and two, for Western Mass. (Palmer and Springfield).

‘We don’t want people acting irresponsibly’

Cordish is one of the largest developers in the world, with extensive expertise in almost every discipline of real estate: entertainment and mixed-use; gaming and lodging; sports -anchored developments, retail, office and residential. During the past 10 decades, the privately held, family-owned has grown into a global conglomerate of businesses defined by two major areas of expertise: real-estate development; and entertainment-district and casino/slots operations. As Cordish enters its 11th decade, it reports to be “well-capitalized and highly energized to continue its growth.”

The following are edited highlights of a robust, sometimes contentious GoLocalWorcester interview that was conducted on September 19 with Weinberg, who has been president of Cordish’s Gaming & Resorts Division for 25 years. He’s been an executive of the 90-year-old company for nearly 30 years.

Do you like to gamble?

I gamble every day in my business.

I know that. I mean, at the tables.

Personally, I’m not a gambler. But I enjoy, from the business side, creating these dynamic gaming and entertainment facilities.

The Institute for American Values has just released a study titled "Why Casinos Matter: A Report from the Council on Casinos. Thirty-One Evidence-Based Propositions from the Health and Social Sciences." Have you seen that report?

I have not.

I’d like to ask you about it. Before we continue, would you like me to send you a link to it?

Sure. Feel free to send it. … Go ahead and ask your questions.

The conclusion of the 56-page report: "Evidence from the health and social sciences suggests that the new American casinos are associated with a range of negative health, economic, political, intellectual, and social outcomes. For this reason, we view state sponsorship of casino gambling as a regressive and damaging policy." Overall, what’s your response to that sort of conclusion? I imagine you’ve seen that conclusion before in other places.

We have one of the largest casino/entertainment facilities in the country, here in Maryland, called Maryland Live! [On September 18], we had a press conference with Arundel County, which is our host jurisdiction and one of the larger counties in Maryland. We were [awarding $20 million in local-impact grants for fiscal 2014], which are generated from the taxes on the casino. Our casino in Maryland generates about $1 million a day for the State of Maryland. In addition to that, this year we’re giving away $20 million in local grants [see recipients and amounts].

… These are all things that could not have happened without the economic benefits from the casino. So I think the people in Arundel County would have a much different view than what you just outlined by [the Institute for American Values].

Is it your feeling that the harmful effects of gambling – particularly, on people who are addicted to gambling - are much more than offset by beneficial effects of the casino or slots parlor, with its investments and donations into the local community?

Yes, absolutely. … Just because you open a new restaurant, does not mean that you’re creating more alcoholics.

Or more obesity, overweight and diabetes.

Right. There is a small percentage of the population that does have various addictions – some, to gambling; some, to alcohol; some, to eating too much; some, to drugs. So a new casino in the market doesn’t necessarily create new problems. However, what it does do is, bring the resources to treat it. For instance, in Massachusetts, you’re surrounded by casinos in Connecticut and other states. If someone [who lives in Mass.] wants to go to a casino, there’s a place within an hour that they can go to.

Right. It’s not like they have to drive from somewhere in California to Reno or Vegas, over several hours away.

Now having the resources in the community to treat the issue, becomes a positive. With all of our employees – and this is not unique just to us; it’s similar throughout the industry – we take any problems very seriously. We don’t want people gambling irresponsibly, we don’t want people drinking irresponsibly, and we don’t want people acting irresponsibly. All of our employees are trained to identify problems and to try to get people who have problems into treatment programs. This would not happen unless you have the resources in the community, to handle it.

The Institute for American Value report also states that “casino gambling has moved from the margins to the mainstream of American life … today’s regional casinos are different from Vegas-style resort … [today’s] casinos depend on problem gamblers for their revenue base.” Do you depend on problem gamblers for your revenue base?

Absolutely not. I mean, that’s just not accurate in any way. The average spend per-capita in our facilities is anywhere from $75 to $100 per visit, so it’s similar to a night out for dinner and a movie. There’s a very small percentage of the population that has problem-gaming issues – somewhere around 1 percent, and change. Of course, not only do we not depend upon it, but if we identify problem gaming, we work to address it and try to get people into treatment programs.

‘We should avoid Big Brother attitudes’

The IAV report also states that “living close to a casino increases the chance of becoming a problem gambler” and “problem gambling is more widespread than many casino-industry leaders claim.”

I don’t know of any indication of that being true on either account – particularly, in a situation where there’s so much gambling already available in the market. Again, just because you’re opening a restaurant, you’re not creating more alcoholics - it’s similar with casinos. There’s been tremendous research by the [gaming] industry and by third-party, unaffiliated groups on the issue of problem gaming. I don’t pretend to have knowledge of all of the studies that have been done.

It’s sort of like saying of addictive eaters, if there were only restaurants in Boston and people in Worcester had to drive to Boston to eat at a restaurant, they’d be less inclined to go there frequently. But if we put restaurants in Worcester, it would cause them to eat out more often and feed their addiction. And yet we don’t close down, picket or boycott restaurants.

Yeah. I don’t know of any statistical analysis that would support [IAV’s] claim.

According to the IAV report, “The new American casino is primarily a facility filled with modern slot machines; a modern slot machine is a sophisticated computer, engineered to create fast, continuous, and repeat betting; modern slot machines are carefully designed to ensure that the longer you play, the more you lose; modern slot machines are highly addictive; [and] modern slot machines are engineered to make players lose track of time and money.”

Slot machines have been around for a long time.

But I’m talking about the modern ones, the high-tech ones.

Look, gaming is a form of entertainment that 35 percent of the U.S. adult population enjoyed last year. There are lotteries in most states, [including Massachusetts]. This is a form of entertainment that, in the U.S., which, the last time I checked, was a free country, the vast majority of the adult population [that engages in gaming] enjoys responsibly. I don’t think the U.S. population wants Big Brother to tell them where they can eat, what they can eat, what form of responsible entertainment they can enjoy, and where they can enjoy it.

Is it sort of like people saying they’re going to crack down on the video-game industry because kids get addicted to it, causing them to spend a prolonged amount of time playing video games such as Grand Theft Auto 5, which is now coming out.

Right. That’s a good example. Or, why don’t we get rid of social media because our kids aren’t talking to each other anymore – they’re doing everything through text? Or, why don’t we get rid of computers because people are getting too many instances of carpel-tunnel injuries? My recommendations is, everybody should make their own decisions and act responsibly. Everything is much better in moderation, and we should avoid Big Brother attitudes.

The IAV report also states that ‘working in a casino appears to increase workers’ chances of having gambling problems [and] … having health problems.”

I know of no statistical support for that.

‘Not diluting any business in town’

In terms of a casino/slots parlor’s economic impact, IAV reports that “the benefits of casinos are short-term and easy to measure while many of their costs are longer-term and harder to measure, casinos extract wealth from communities, casinos typically weaken nearby businesses [and] casinos typically hurt property values in host communities.”

Let me make a recommendation: If you want to do an article on that report, call the American Gaming Association, who deals with industry-wide issues [in] all of these reports that come out. If you’d like to talk about the project that we plan and what we see happening in Leominster, I’d be happy to do it.

But my questions about the IAV report are in regard to the Cordish slots proposal for Leominster, where there’s a referendum on the ballot on Tuesday. There are some people who are opposed to it, and these are the sorts of questions they may have.

We had nothing to do with the state of Massachusetts passing legislation [in 2011] to allow gaming.

I understand that. But you still want to see the Leominster referendum pass, right?

That’s correct. The [elected people who represent the people of Massachusetts looked into all of these issues, and they made a decision, on balance, that casino [and slots] gaming was going to be beneficial to the people of Massachusetts. That’s been determined and voted on by the people of Massachusetts [through their elected state officials]. I’m happy to talk about our [Leominster] project and what we’re doing [there]. I didn’t realize we were going to go, point by point, on everything – that this was the main purpose of your call.

I’m using the IAV report as an entry point into what your slots proposal mean for the Greater Leominster and North Central Mass. economy. Is it going to have an overall beneficial effect, or is it going to suck dollars out of the local economy and hurt property values, as these folks claim?

First of all, we’re going to be the largest taxpayer in Leominster - we’ll be sending $4 million a year to the city. We’re getting no subsidies – this is all net benefit to Leominster. We’re creating 1,200 direct jobs, and then another 1,200 indirect jobs – spinoff jobs from the facility. Our employees are all going to earn benefits. We have jobs in every area, from finance, accounting, marketing, human resources, security, surveillance, food and beverage, as well as gaming operations. We are going to hire the vast majority of our employees from the local region – from Leominster and the surrounding communities.

We have tens of millions of dollars [annually] in local goods and services that we are going to purchase - we are going to have outreach efforts, to try to satisfy the bulk of our requirements in Leominster and the surrounding communities, as much as possible. In fact, we’ve already had a Vendor Fair, [held on September 10 in Leominster City Hall], to start to identify local businesses that we can use – and we’ll have a number of those, as we go through the [facility development and operation] process. We’re going to make sure we work with veterans and disabled groups so that all populations have a fair chance to get employment at our facility.

We’re [also] building a [municipal] police substation as part of the facility. If you look at issues like crime, at our Maryland facility, the year before we opened and the year after we opened, we brought down crime – it declined 25 percent – as a result of all the new security and surveillance assets that we brought in, in coordination with local police, to the community.

As we’ve seen across America when a Walmart store enters a local market, do Greater Leominster businesses need to reposition themselves, as a result of a Cordish slots parlor being developed there, to serve markets that the slots parlor can’t serve? Do they need to start acting like real businesses, start being competitive again, and stop crying in their beer, as sustainable-capitalism expert Michael Shulman points out in his book, The Small-Mart Revolution: How local businesses are beating the Global competition?

Absolutely, [yes]. Also, not only are we not diluting any business in town. They’re going to benefit from all the economic needs that we have.

Will there be restaurant and retail components to the Leominster slots parlor?

There’s no retail. We have three restaurants that are part of the facility.

So if people want to go to those restaurants, then the restaurants that are locally owned and operated would need to find either another niche or another business to go into, if they can’t compete.

No they’re not. We’re bringing in 2 million people a year - most of whom don’t live in Leominster. [Local restaurants] are going to benefit from all these new people who are coming into the area. We’re going to work on all kinds of cross-marketing programs with the area restaurants.

If you look at our other facilities, like in Maryland, we have restaurants in our casino. But [for] the restaurants around us, all their sales went up because we’re bringing all these new people into the area. Sometimes they’re going to eat in our restaurants, and sometimes they’re going to eat in area restaurants, because they don’t want to eat in the same restaurant every time. So not only does it not dilute [the local economy], but we’re going to significantly enhance not only businesses like restaurants.

We [also] use [local] printers - companies who print collateral and direct-mail [pieces]. We use [local] landscapers and florists, and we buy office supplies, food and beverages [from local vendors]. There’s just so much that we buy, that we want to source locally, that this is an incredible enhancement to the community. So there’s no dilution – it’s only positive.

It sounds like your hope and expectation is that all boats will rise – that is, if the local, independent businesses take advantage of the opportunity.

[Yes,] no question. This is a case where we’re only bringing in new economic activity. If you look at North Central [Mass.], [the] unemployment [rate] is higher than the state average and higher than the U.S. average. Why is that?

It’s got an aging infrastructure. It’s got plastics-industry businesses that either went out of business or moved either somewhere else in the country or offshore decades ago.

And so how are we going to address that? By not bringing in new industries and new companies that are going to pay a lot of taxes, that don’t need subsidies and that are going to buy from the local community? Under what circumstance would it be not good to bring in a new, major employer who’s not taking anything from the community but [is instead] infusing all of these jobs and all of these expenditures in the local economy

‘The majority has spoken’

Let me wrap up by referring back to the IAV report.

By the way, I have no idea who this group is. I have no idea how credible or non-credible [it is].

Apparently, they’re pretty credible. Their report is getting picked up by news media all around the country.

That doesn’t mean anything.

I’m talking about the mainstream news media. Usually, they don’t repeat something that’s from some wacko organization.

I’m just saying that I have no idea who the group is, so I can’t comment.

Let me put it in my own words, then. Historically, as I understand it, encouraging people to put their money into slot machines was viewed as unethical, and that encouraging legal gambling as fun entertainment and an all-American pastime is a relatively new development. How much of this is because we have this Puritanical past - and platform that we were built on, originally – and we just need to start shedding that skin because that’s not America, anymore?

First of all, somewhere around 40-plus states allow casino gaming in some form.

But here in New England, we’re still saddled with this Puritanical ethic.

Most states around the country allow some form of casino gaming, including New England states. Maine does. Massachusetts does, now. Connecticut [does]. So it’s not like it doesn’t exist in New England – and everywhere. There is a certain group [of people] that opposes it and a larger majority [of people] that supports it. You can find that, on most issues.

Is this acceptance of casino gaming reflective of an overall transformation of America, as it becomes more culturally rich and diverse as opposed to 100 or 200 years ago?

Do you know what the average is, of a casino gamer? The average demographic is a 55-year-old - it slightly skews female – with a higher education and higher household income than the national average.

Where is it headed over the next 10 years or so?

It’s really a cohort [life-cycle] situation as opposed to a generational situation, I believe, because of the following reasons. Most casino revenues, anywhere in the country, come from people who are [age] 40-plus, and there’s a very good reason for that.

Their kids are out of college, their house is starting to be paid off, and they’ve got some disposable income again.

Exactly. So it tends to be people who are older, have more money, and have more discretionary income and time. And so to preach to this large group of people, who are more educated, higher-income and older, what they can and cannot do, I think is a mistake. There’s always a group everywhere that opposes [something], whether it be gaming or any other issue that comes up.

But the facts are – in this case – that each state weighs the pros and cons, and the people themselves make the decision by voting on it, in most states, to approve or not approve of casino gaming. While there may be some group or groups that come up with reports like this, the fact is that the majority has spoken, that this is an allowable, mainstream activity that the state believes that the people of Massachusetts can overwhelmingly benefit from the economic development.

Within that context, we’re excited about [the Leominster slots proposal]. We think that our location in North Central [Mass.] is going to allow us to be able to address some of the high unemployment in that region, that we’re going to be a tremendous economic generator and that we’re going to be a great corporate citizen – as we are in every other market.

… [Because of the cohort situation], there’s no effort on the part of the [gaming] industry to try to create a younger market because that’s just not likely [to be there].

Steven Jones-D'Agostino is chief pilot of Best Rate of Climb: Marketing, Public Relations, Social Media and Radio Production. Follow him on Twitter @SteveRDAgostino.

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